accidentally contribued to traditional IRA instead of Roth.

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Topic Author
teacher2163
Posts: 255
Joined: Wed Jan 15, 2020 7:21 am

accidentally contribued to traditional IRA instead of Roth.

Post by teacher2163 »

I accidentally contributed to a Traditional IRA at Vanguard this morning. I want it to be in a Roth IRA. What is the simplest method to do this? Can I just convert it to a Roth on the website? I saw this option, but wanted to make sure I am not missing something important. Thanks for the help
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retiredjg
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Re: accidentally contribued to traditional IRA instead of Roth.

Post by retiredjg »

Do not "convert" to Roth. Instead, call the custodian and ask them to "re-characterize" the ____ contribution you made on ____ from traditional to Roth IRA. It will be as if the money were put into Roth IRA in the first place.

It's a "do over".
livesoft
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Re: accidentally contribued to traditional IRA instead of Roth.

Post by livesoft »

You might be missing something important: If you have another traditional IRA, SEP-IRA, or SIMPLE then the amounts in them will require you to pro-rate the conversion to a Roth IRA of your accidental traditional IRA. If you don't have another traditional, nor SEP-IRA, nor SIMPLE, then no issue with converting your accidental traditional IRA to a Roth IRA. Be sure to convert not only your contribution, but also any gains that it has made even if it takes two separate conversions on different dates.
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queenofthemadhouse
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Joined: Fri Jun 04, 2021 5:26 pm

Re: accidentally contribued to traditional IRA instead of Roth.

Post by queenofthemadhouse »

A recharacterization is quick and painless. Give them a call and it should be easily handled.
Topic Author
teacher2163
Posts: 255
Joined: Wed Jan 15, 2020 7:21 am

Re: accidentally contribued to traditional IRA instead of Roth.

Post by teacher2163 »

Thanks for the responses. I will give them a call. Fortunately, I had no balance in the traditional IRA.
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Duckie
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Re: accidentally contribued to traditional IRA instead of Roth.

Post by Duckie »

teacher2163 wrote: Tue May 30, 2023 7:23 am Thanks for the responses. I will give them a call. Fortunately, I had no balance in the traditional IRA.
Be aware that if you recharacterize there will be a little extra tax paperwork next year. You'll get a 1099-R for the distribution from the TIRA which needs to go on the return and will have to make the required recharacterization statement.
Topic Author
teacher2163
Posts: 255
Joined: Wed Jan 15, 2020 7:21 am

Re: accidentally contribued to traditional IRA instead of Roth.

Post by teacher2163 »

Thanks for the advice. I called Vanguard and had it fixed in a few minutes. I will make notes about the recharacterization in my tax notes, regarding the paperwork.
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Re: accidentally contribued to traditional IRA instead of Roth.

Post by placeholder »

teacher2163 wrote: Tue May 30, 2023 7:23 am Thanks for the responses. I will give them a call. Fortunately, I had no balance in the traditional IRA.
That would not have mattered for a recharacterization only a conversion.
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